Dissatisfaction with Regulations Tightening Businesses Rises... 4 out of 10 Companies Say They Will Reduce Employment

Announcement of Business Leaders' Perception Survey Results... 230 Companies Respond
'Reduction in Domestic Investment' 27.2%... Urgent Need to Improve Labor Regulations
Concerns Over Weakening Corporate Competitiveness and Promotion of Anti-Business Sentiment

[Asia Economy Reporter Kim Bo-kyung] Due to recent regulatory tightening, including the three corporate regulation laws, 4 out of 10 companies are considering reducing employment. A survey also found that 7 out of 10 companies are dissatisfied with South Korea's industrial regulations, which are stricter than those of foreign countries.

On the 15th, the Korea Venture Business Association, the Federation of Korean Industries, and the Korea Association of Mid-sized Enterprises jointly announced the results of a survey conducted last month on corporate perceptions of regulatory tightening. The survey, which gauged corporate opinions on the three corporate regulation laws such as the Commercial Act and the Fair Trade Act passed by the National Assembly at the end of last year, as well as industry-specific regulations, received responses from a total of 230 companies, including 28 large enterprises, 28 mid-sized enterprises, and 174 venture companies.

When asked how recent regulatory tightening would affect company management, responses indicating consideration of 'domestic employment reduction (37.3%)', 'domestic investment reduction (27.2%)', and 'relocation of domestic business sites (factories, corporations, etc.) overseas (21.8%)' totaled 86.3%. By company size, large enterprises (50%) and mid-sized enterprises (37.7%) most frequently cited 'domestic investment reduction'. Venture companies most frequently cited 'domestic employment reduction (40.4%)'.

Additionally, regarding the 'relocation of domestic business sites overseas' item, the response rate among large enterprises was only 9.3%, whereas mid-sized enterprises and venture companies recorded 24.5% and 24%, respectively, which is 2.6 times higher than that of large enterprises.

Among all responding companies, 160 companies, accounting for 69.5%, expressed 'very dissatisfied (44.3%)' or 'dissatisfied (25.2%)' with the recent government and National Assembly's corporate regulatory tightening. By company size, dissatisfaction was highest among large enterprises at 96.5% (very dissatisfied 67.9%, dissatisfied 28.6%), followed by mid-sized enterprises at 82.2%, and venture companies at 63.2%.

Conversely, companies that answered 'very satisfied (3.0%)' or 'somewhat satisfied (6.5%)' accounted for only 9.5% of the total, or 22 companies (1 mid-sized, 21 venture companies), with no large enterprises responding as such. The response rate for 'neutral' was 20.9%.

The 160 companies that answered 'dissatisfied' or 'very dissatisfied' cited reasons such as ▲ overall deterioration of institutional environment weakening corporate competitiveness (59.4%) ▲ fostering anti-corporate sentiment by viewing companies as potential criminal groups (31.9%) ▲ hindrance to new industry entry and damage to entrepreneurial spirit (3.8%).

Regarding the most urgent policy tasks the government should prioritize to revitalize corporate vitality, the responses were ▲ complete revision of anti-market policy orientation (56.1%) ▲ expansion of financial support and economic stimulus (21.7%) ▲ relaxation of industry-specific regulations such as new business regulations (19.1%).

When asked about the intensity of South Korea's industrial regulations compared to foreign countries, 77.3% of responding companies answered 'very strong (43.0%)' or 'strong (34.3%)'. In contrast, only 6.5% (15 companies: 1 mid-sized, 14 venture companies) answered that the regulatory intensity was 'weak (4.3%)' or 'very weak (2.2%)'.

The top priority for urgent improvement was labor-related regulations (39.4%). This was followed by tax-related regulations (20.4%) and discriminatory regulations by company size under the Commercial Act and Fair Trade Act (13.4%). By company size, large enterprises selected 'discriminatory regulations by company size under the Commercial Act and Fair Trade Act (47.3%)' as the top priority.

Mid-sized enterprises (37.5%) and venture companies (44%) answered that improvement of 'labor-related regulations such as the 52-hour workweek' was the most urgent. Notably, mid-sized enterprises (23.2%) and venture companies (22.4%) ranked 'tax-related regulations such as corporate tax reductions and easing of corporate comprehensive real estate tax burdens' as the second priority after labor regulations.

This content was produced with the assistance of AI translation services.